Are the Youth and Women of Kenya ready for Business?

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A Study on Youth and Women Entrepreneurs’ Preparedness in Kenya: A Case Study of the Kenya Youth Enterprise Development Fund and Kenya Women Enterprise Fund Beneficiaries using the TRISTART Business Evaluation Tool.

AUTHORS: Jackline Sagwe Samuel Gicharu Timothy Mahea

KENYA INSTITUTE OF MANAGEMENT PUBLICATION, 2011

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EXECUTIVE SUMMARY
ABOUT TRISTART TOOL TriStart is a unique, online self-assessment business readiness evaluation tool, which offers an overall business readiness score. It provides an analysis of an individual’s personalized business readiness report based on 19 key components which have been grouped into three categories, and then statistically correlated into entrepreneurial success criteria consisting of: Market and Technology (technology orientation, market status, market prospects and customer orientation), Experience and Skills( breadth of business experience, business experience, business planning expertise, business area expertise, level of responsibility, finance and accounting, administration and sales and marketing) and Entrepreneurial Spirit ( strategic focus, appetite for risk, dynamism, visual communication, informal communication, team independence and team player). Based on the responses provided in the online survey, individuals are scientifically graded against successful and not-so-successful businesses which have gone before them. TriStart assessment delivers a clear understanding of an individual or team’s strengths and weaknesses thereby enabling them to identify where they need interventions. The tool is of relevance to entrepreneurs at start up and various stages of growth, venture capitalist, and institutions financing SME’s. It enables banks and venture companies understand the viability of a business that they are advancing credit to. Study Background It is widely acknowledged that SMEs generate employment opportunities, economic growth and produce commercial innovations of high quality. Consequently, there is a growing appreciation within Government, Development Community and Civil Society that an important aspect of holistic and all inclusive development is the active participation and involvement of women and the youth in decision making. The population growth rate of the youth has outstripped both the growth the economy and employment opportunities. This means in essence fresh employment opportunities must be created including by the youth themselves. The best way therefore the youth can create opportunities is through entrepreneurship. Similarly, to achieve sustainable wealth creation and employment, women’s participation in the small business sector is a growing phenomenon worldwide. Entrepreneurship has been recognized in various government policy documents as the engine of economic change with a growing tendency for small enterprises promotion. While considerable Research has been conducted into the reasons why women enter SMEs, less is known about their business readiness and the challenges they face in growing their businesses. Achieving gender parity and empowering women in SMEs remains therefore a key consideration in both the Medium Term Plan 2008 – 2012 and Vision 2030 where entrepreneurship is identified as one of the key drivers of socio economic transformation. Various programs by the Kenya Government such as youth and women enterprise development funds have already been put in place in order to facilitate creation of entrepreneurial ventures in Kenya. The question is how prepared are the Kenyan youth and women to enterprise development. The Kenya Institute of Management through its SME Solution centre sought to assess business readiness among the youth and women entrepreneurs using the TriStart business evaluation tool. The TriStart helps determine how well an existing or an individual’s idea does in the market by identifying key factors critical to business success, applying a business readiness score highlighting business success or failure factors by highlighting the strengths and weakness of an individual and the team in the business. The evaluation explores personality characteristics, competencies, and motives before one begins an entrepreneurial venture. Study Objectives Our study sought to determine whether the youth and women of Kenya are ready for business. The study was guided by the following questions; (i) What is the level of business readiness among the youth and women entrepreneurs in Nairobi, Kenya? (ii) What are the factors that contribute to the business readiness among the youth and women entrepreneurs in Nairobi, Kenya? (iii) Do individual capabilities of entrepreneurs such as training, education, and prior experience in the same field have a significant effect on the growth of the business through the management strategies and business practices they choose to adopt? Methodology The study adopted a cross sectional descriptive design. The study population consisted of entrepreneurs who have benefited from the Kenya Youth Fund and Women Fund. The study adopted two-stage sampling. The first step involved stratification of entrepreneurs in terms of type of funding:

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Youth fund and Women Fund. Secondly, a random sample of 240 entrepreneurs was selected in proportionate to the size of each stratum (type of fund). Primary data collection method by use of questionnaires carefully designed by Tristart to assess business readiness of the sample randomly selected. Prior to data collection, ethical approval was sought from National Council of Science and Technology (NCST). Data management and analysis was done using SPSS. Data management involved checking for consistency, coding, labeling and documenting. During management, overall data quality was assessed. Data was disaggregated into type of funding; gender and analyzed appropriately. The analysis was categorized into business sector, business knowledge, experience, market position and style. The study targeted 240 entrepreneurs drawn from both Youth and Women funds in equal proportions, however only 110 youth entrepreneurs and 75 women entrepreneurs responded translating to a response rate of 91.7% and 62.5% response rate for women and youth. The entrepreneurs were distributed across the eight constituencies as follows: Dagoretti (9.2%); Embakasi (17.3%); Kamukunji (12.9%); Kasarani (5.4%); Langata (6.5%); Makadara (3.7%); Starehe (24.4) and; Westlands (9.2%) Study Findings On business sector, majority of the entrepreneurs (86%) indicated that they need both advice and money. On business start up, about one third of the entrepreneurs indicated that they will be ready in 1 to 3 months to start their business. This indicates that this category of entrepreneurs after receiving funding did not start their business immediately. Further, majority (59%) of the entrepreneurs had not developed business plans and only 30% of the entrepreneurs indicated that they had submitted the business plans they developed to investors, bank and support agency. On market sector the respondents responded to growth prospects, level of competition and market existence. Majority (79.5%) of the entrepreneurs indicated that team members are very important as sources of support. About average of the entrepreneurs had not modified their products/services to give greater customer appeal. Further, majority of the entrepreneurs indicated that the products and services they offer were customer friendly. Majority (76.8%) of the entrepreneurs surveyed indicated that they prefer when success brought about their effort is attributed to everyone in the team. Average of the entrepreneurs described their communication style as predominantly formal and they naturally communicate what needs to be done by assigning clear responsibilities and tasks.

On team preferences about two thirds of the entrepreneurs surveyed indicated that they would like to be part of the team that encourages their individuals to do their own things By completing the TriStart evaluation the entrepreneurs were assessed against the TriStart entire database of global startup and early stage businesses on which the TriStart research programme is based. The entrepreneur’s TriStart evaluation score reflects his/her current likelihood of being successful in his/her business venture. The evaluation identifies three core component categories within which the 19 critical factors sit. These are knowledge and skills; market and technology and entrepreneurial spirit. Individualized reports indicate that overall the women fund beneficiaries scored better on business readiness as compared to youth fund beneficiaries. 61% of the youth beneficiaries scored 26 -50% whereas 68% of the women fund beneficiaries scored the same. 39.1% of the youth fund beneficiaries scored 51-75% whereas 32% of the women fund scored the same. Majority of the entrepreneurs (98%) scored 0 -25% on market and technology. An indication that entrepreneurs are not well prepared in market and technology. On experience and skills, 46.4% of the youth entrepreneurs rated breath of experience as high and 34.7% of the women entrepreneurs rated it as low. Business experience was rated medium on average by both youth and women entrepreneurs. Business planning expertise on the other hand was rated lowly by both the youth and women entrepreneurs. Interestingly level of responsibility was rated highly by both youth and women entrepreneurs. Entrepreneurial spirit was assessed on strategic focus, appetite for risk, dynamism, vision communication, informal communication, team independence and team player. 50.7% of the women fund entrepreneurs and 53.6% of the youth fund entrepreneurs rated (50.7%) rated strategic focus as low. On the other hand 43.6% of the youth and 37.3% of the women fund entrepreneurs rated appetite for risk as high. The results further indicate that dynamism was rated highly by both entrepreneurs. Vision communication was rated as medium. Interestingly team independence was rated by majority from both youth and women entrepreneurs as low. Conclusion 61.3% of the women entrepreneurs and 48% of the youth surveyed have less than 50% likelihood of business success. This explains why 1 in every 3 new businesses fails within the first 6 months.

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The entrepreneurs were assessed on: 1. Knowledge and skills 2. Market and Technology 3. Entrepreneurial spirit Knowledge and Skills This involved entrepreneurs’ breadth of experience, business experience, business planning expertise, work experience, business area expertise and level of responsibility. The key findings are • • • Entrepreneurs demonstrated inadequate knowledge of the sector they operate in. 46.4% of the respondents indicated that the business launched had performed okay Insufficient branding, brand awareness and brand distinction

Market and Technology On this the entrepreneurs were assessed on technology orientation, market status, market prospects and customer orientation. • Majority of (98%) scored 0 -25% on market and technology. An indication that entrepreneurs are not well prepared in market and technology and yet they operate in a business environment that is technologically advanced. This explains why half do not apply new methods or technology to provide products/services at lower cost. • Team members were as well as suppliers was identified as very important sources of support by the entrepreneurs. • Half of the entrepreneurs had not modified their products/services to give greater customer appeal. • Majority (65.4%) of the entrepreneurs surveyed indicated that they would like to be part of the team that encourages their individuals to do their own things. • 50.3% indicated that, “I hate uncertainty”, applies to them. This is an indication that they are not willing to undertake risky ventures. • Lastly in a scale of 1(low) and 3(high) majority of the entrepreneurs rated their knowledge on technology orientation and market status as low

Entrepreneurial Spirit This involved entrepreneurs’ strategic focus, appetite for risk, dynamism, visual communication, informal communication, team independence and team player. • Overall 98% of the entrepreneurs scored 26-50% on entrepreneur spirit • 97.3% of the youth fund beneficiaries scored 26-50% whereas 100% of the women fund beneficiaries scored the same. • In a scale of 1(low) and 3 (high) majority of the entrepreneurs rated their knowledge on strategic focus and team independence as low. • Dynamism and visual communication was rated highly by both entrepreneurs. Growth prospects, level of competition in the market sector, knowledge of a clear leader in the market sector, business knowledge, prior work experience and its relevance to the business venture and market position are among the factors that contribute to the business readiness among the youth and women entrepreneurs in Nairobi, Kenya. Individual capabilities of entrepreneurs such as training, education, and prior experience in the same field were found to have a significant effect on the growth of the business venture. In conclusion the results indicate that entrepreneurial readiness is still low among the entrepreneurs who benefited from both youth and women fund. This is therefore crucial for enterprise funders needs to assess the entrepreneurs on business readiness to identify the business readiness gaps. Further the results are useful in categorizing entrepreneurs for purposes of training.

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CONTENTS
EXECUTIVE SUMMARY .................................................................................................................................................................................... 2 1.0 Introduction ............................................................................................................................................ 8 1.1 Objectives of the study ............................................................................................................................................................. 8 1.2 Research Questions ................................................................................................................................................................... 8 2.0 Literature Review.................................................................................................................................... 8 2.1 Introduction .................................................................................................................................................................................. 8 2.2 Women Entrepreneurship ....................................................................................................................................................... 9 2.3 Youth Entrepreneurship ........................................................................................................................................................... 9 2.4 Need for Entrepreneural Preparedness.............................................................................................................................10 2.5 Motivation to become an Entrepreneur ...........................................................................................................................10 2.6 Team Formation.........................................................................................................................................................................11 3.0 Data and Methods ................................................................................................................................11 3.1 Introduction ................................................................................................................................................................................11 3.2 Research Design ........................................................................................................................................................................11 3.3 Population and Sampling Design........................................................................................................11 3.3.1 Population ...................................................................................................................................................................................11 3.3.2 Sampling Technique ................................................................................................................................................................11 3.4 Data Collection Methods .......................................................................................................................................................12 3.5 Data Entry Management and Analysis ..............................................................................................................................12 4.0 Discussion of Study Findings ...............................................................................................................12 4.1 Demographics ............................................................................................................................................................................12 4.2 Business Sector ....................................................................................................................................13 4.2.1 Business Idea ..............................................................................................................................................................................13 4.2.2 Market Sector .............................................................................................................................................................................15 4.3 Business Knowledge.............................................................................................................................18 4.3.1 Knowledge and Business Plan..............................................................................................................................................18 4.4 Experience .............................................................................................................................................19 4.4.1 Work Experience........................................................................................................................................................................19 4.4.2 Business Experience .................................................................................................................................................................21 4.5 Market Position ..........................................................................................................................................................................21 4.5.1 Sources of Support ...................................................................................................................................................................21 4.5.2 Competitive Advantage..........................................................................................................................................................21 4.5.3 Product .........................................................................................................................................................................................22 4.6 Style .......................................................................................................................................................22 4.6.1 Communication .........................................................................................................................................................................22 4.6.2 Team Preferences ......................................................................................................................................................................23 4.6.3 Attitude.........................................................................................................................................................................................24 4.7 Tristart Individualised Report .............................................................................................................24 4.7.1 Knowledge and Skills...............................................................................................................................................................25 4.7.2 Market and Technology ..........................................................................................................................................................25 4.7.3 Entrepreneurial Spirit ..............................................................................................................................................................26 4.8 Tristart Factors ............................................................................................................................................................................27 4.8.1 Market and Technology ..........................................................................................................................................................27 4.8.2 Experience and Skills ...............................................................................................................................................................27 4.8.3 Entrepreneurial Spirit ..............................................................................................................................................................28 5.0 Discussions, Conclusions and Recommendations .............................................................................28 5.1 Business Idea ..............................................................................................................................................................................28 5.2 Market Sector .............................................................................................................................................................................29 5.3 Style ...............................................................................................................................................................................................29 5.4 Results on Individualised Reports .......................................................................................................................................29 5.5 Conclusions and Recommendations .................................................................................................................................29 5.6 Limitations and Future Research .........................................................................................................................................29 References...............................................................................................................................................................30

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LIST OF TABLES
Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8: Table 9: Constituencies respondents sampled from ....................................................................................................................13 Responses on start up .............................................................................................................................................................14 Success of Business Launch...................................................................................................................................................15 Growth prospects .....................................................................................................................................................................15 Level of competition in the market sector .......................................................................................................................16 Other Factors on market sector ...........................................................................................................................................17 Responses on Knowledge and business plan.................................................................................................................18 Contents of the Business Plan ..............................................................................................................................................19 Relevance work experience to business venture ..........................................................................................................21

Table 10: Business Experience .................................................................................................................................................................21 Table 11: Sources of Support ...................................................................................................................................................................21 Table 12: Competitive Advantage..........................................................................................................................................................22 Table 13: Product .........................................................................................................................................................................................22 Table 14: Communication .........................................................................................................................................................................23 Table 15: Team Preferences ......................................................................................................................................................................24 Table 16: Attitude.........................................................................................................................................................................................24 Table 17: Cross tabulation on type of funding received and Overall Tristart Evaluation results.....................................25 Table 18: Cross tabulation on type of funding received and; Knowledge and skills ...........................................................25 Table 19: Cross tabulation on type of funding received and entrepreneurial spirit ............................................................27 Table 20: Rating on Market and Technology......................................................................................................................................27 Table 21: Rating on Experience and Skills ...........................................................................................................................................27 Table 22: Entrepreneurial Spirit ..............................................................................................................................................................28

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LIST OF FIGURES
Figure 1: Response rate ................................................................................................................................................................................12 Figure 2: Advice to entrepreneurs ............................................................................................................................................................13 Figure 3: Are you working for yourself or someone else..................................................................................................................13 Figure 4: Business Plans ...............................................................................................................................................................................14 Figure 5: Use of Business Plans in Seeking Funds ...............................................................................................................................14 Figure 6: Business Launch ...........................................................................................................................................................................15 Figure 7: Market Existence .........................................................................................................................................................................16 Figure 8: Business Expectations ................................................................................................................................................................18 Figure 9: Work Experience ...........................................................................................................................................................................19 Figure 10: Highest level of responsibility held.....................................................................................................................................20 Figure 11: Are the people you work with previous colleagues......................................................................................................20 Figure 12: Knowledge and Skills ..............................................................................................................................................................25 Figure 13: Market and Technology ...........................................................................................................................................................26 Figure 14: Cross tabulations on type of funding received and, Market and technology .....................................................26 Figure 15: Entrepreneurial Spirit ...............................................................................................................................................................26

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1.0 Introduction Entrepreneurship has become a vital driver for economic growth, economic competitiveness, job creation and the advancement of societal interests (Linan, Rodrıguez-Cohard and Rueda-Cantuche, 2005). Van Praag and Versloot (2007), based on a literature review of 57 studies on the relationship between small enterprises and economic growth, and concluded that entrepreneurs play a very important role in the economy. According to the authors, these smaller enterprises generate employment opportunities, economic growth and produce commercial innovations of high quality. Consequently, there is a growing appreciation within Government, Development Community and Civil Society that an important aspect of holistic and all inclusive development is the active participation and involvement of women and the youth in decision making. Such an orientation – in effect achieving gender equality and empowering women is considered to be one avenue for promoting women’s rights, empowerment, and leadership actively by positioning them at the center of economic development. The focus on the youth has also gained a lot of support since their population has been growing at a high rate and the employment opportunities have not matched that growth. This has therefore shifted the focus to empowering of the youth in order to enable them become entrepreneurs and hence employers. Various programs by the Kenyan Government such as Kenya Youth Enterprise Development Fund have already been put in place in order to facilitate creation of entrepreneurial ventures in Kenya. However, women and youth face barriers in their quest to become successful in entrepreneurship. Major barriers encountered include; lack of confidence in their own capabilities, lack of working capital since majority of them especially in the rural areas earn less in employment, and socio-cultural barriers since women have to perform multiple roles of a familial nature irrespective of their career. Achieving gender equality and empowering women in SMEs remains a key consideration in the Medium Term Plan 2008 – 2012 and Vision 2030 where entrepreneurship is identified as one of the key drivers of socio economic transformation. It’s in this respect that the Kenya Institute of Management through its SME Solution Centre sought to assess business readiness among the youth and women entrepreneurs using the TriStart tool business evaluation tool. The TriStart helps determine how well an existing or an individual’s idea does in the market by identifying key factors critical to business success, applying a business readiness

score highlighting the propensity for success or failure and highlighting the strengths and weakness of an individual and the team in the business. The evaluation explores personality characteristics, competencies, and motives before one begins an entrepreneurial venture. 1.1 Objectives of the study The main objective of the study is to explore business readiness of both women and youth who have benefited from the Women Fund and Youth Fund respectively. It is commonly assumed that those who seek entrepreneurial funding are ready for business. This study therefore sought to investigate whether these assumptions hold and if so how gender and age plays a part in shaping such outcomes. The study specifically sought to address the following objectives: i To assess the level of business readiness among the youth and women fund beneficiaries. ii To identify business readiness gaps among the youth and fund beneficiaries. iii To generate information for influencing policy in making choices and implementing cost effective interventions that enhance business readiness among the youth and women entrepreneurs. 1.2 Research Questions i. What is the level of business readiness among the youth and women entrepreneurs in Nairobi, Kenya? ii. What are the factors that contribute to the business readiness among the youth and women entrepreneurs in Nairobi, Kenya? iii. Do individual capabilities of entrepreneurs such as training, education, and prior experience in the same field have a significant effect on the growth of the business through the management strategies and business practices they choose to adopt? The remaining part of the paper is organized as follows. Section two presents the literature review, section three data and methods, section four study findings and section five presents the discussion of findings and recommendations. 2.0 Literature Review 2.1 Introduction Most people think of entrepreneurship as the process of starting a new business. Researchers, theorists, and business practitioners define it in many different ways. For example, Gartner (1988) defines an entrepreneur as someone who creates new independent organizations. Schumpeter (1934) defined entrepreneurs as innovators who implement entrepreneurial change within markets,

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where entrepreneurial change has five manifestations: the introduction of a new (or improved) good; the introduction of a new method of production; the opening of a new market; the exploitation of a new source of supply; and the re-engineering/organization of business management processes. On the other hand, Shane and Venkataraman (2000) define entrepreneurship as a field of business that seeks to understand how opportunities to create something new created by specific persons, who then use various means to exploit or develop them, thus producing a wide range of effects (p. 218). Dollinger (2003) on the other hand interprets entrepreneurship as the creation of an innovative economic organization (or network of organizations) for the purposes of gain or growth under conditions of risk and uncertainty. According to Timmons and Spinelli (2003) entrepreneurs are self-starters who appear driven internally by a strong desire to compete against their own self-imposed standards and to pursue and attain challenging goals. The authors further argue that real entrepreneurs have low need for status and power, but they derive personal motivation from the challenge and excitement of building enterprises. In their study involving 130 members of the Small Company Management Programme at Harvard Business School, they found out that motivation to excel was the single most important factor in their longterm successes. The need to excel is characterized by high but realistic goals, drive to achieve and grow, and interpersonally supporting versus competitive. 2.2 Women Entrepreneurship Women’s participation in the small business sector is a growing phenomenon worldwide. While considerable research has been conducted into the reasons why women enter small business, and their penchant for operating solo operations or micro businesses (up to five employees), less is known about their level of business preparedness. Female entrepreneurs often tend to pursue business in a limited number of sectors, in which women traditionally are economically active such as the retail and service sectors. Research from the West indicates that female business owners prefer to start their business in sectors where female employment is concentrated (Luber and Leicht, 2000; McManus, 2001). The choice of sector is attributed to a combination of resource constraints, environmental uncertainty and specific female aversion to risk-taking, which lead them to engage in activities with low entry thresholds and low financial risk. This pattern helps explain why female businesses are typically smaller in employment and sales than their male counterparts. The

sectors women therefore prefer for starting a business are mostly characterised by high turbulence rates, thus providing relatively few opportunities for rapid business growth (Storey, 1994; Robb and Wolken, 2002). Buttner and Moore (1997) and Lerner et al. (1995) highlighted women’s motivations to start their own businesses such as self-fulfilment and personal goal attainment among others, as the prime reason for women’s low quantitative performance (such as jobs creation, sales turnover and profitability) when compared to men. Selection of strategies that focused on market expansion and new technologies, as well as willingness to incur greater opportunity costs for the superior performance of their firms were the key factors for the high growth of women-owned business as compared to low or no growth firms (Gundry andWelsch, 2001) This literature review provides insights into the nature and characteristics of women-owned businesses. However little has been down on their level of preparedness on market and technology; knowledge and skills and; entrepreneurial spirit. 2.3 Youth Entrepreneurship The level of unemployment in Kenya is very high. The most affected by high unemployment rates are the youth who after graduating from Universities and other institutions of learning, find themselves unable to secure formal employment opportunities, thereby failing to gainfully contribute to economic development of this country despite their enthusiasm, energy and drive. According to the ILO (ILO publication, 2007), the increase in the number of youths in secondary and tertiary education is a positive development; however, labour markets in many countries are presently unable to accommodate the expanding pool of the skilled young graduates. In Africa, several African governments have developed entrepreneurial skills development programs in order to solve youth unemployment problem and ensure economic growth (Nafukho, 1998). In the case of Kenya for instance, the Government has created both a youth entrepreneurship fund the belief that this will stimulate the creation of new business enterprises by Kenyan entrepreneurs (Nafukho, 2007). The question is how prepared are the youth for entrepreneurship. It is important therefore to note that money is only one of the resources that apply to a business; it is inevitable that entrepreneurship culture and expertise be first inculcated to the youth and the prospective entrepreneurs.

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2.4 Need for the Entrepreneurial Preparedness Entrepreneurs are people who create and grow ventures and all entrepreneurs must be successful business people, but not all business people are entrepreneurs (Macke and Markeley, 2003).The authors further argue that many business people run great businesses, but they are not motivated or lack the skills to grow businesses and create new enterprises. Whereas entrepreneurs create new enterprises for different reasons such as self-sufficiency, lifestyle, or desire for wealth they are all motivated to turn ideas into new business ventures. Small, medium and micro enterprises (SMEs) play major roles in economies by creating jobs and increasing income levels of a majority of the people (Ongori and Migiro, 2009). These enterprises serve as drivers of economic growth and innovation. However, SMEs face a myriad challenges. To minimise the challenges, it’s important to assess the business readiness of the entrepreneurs. To be successful as entrepreneurs, people must possess certain behaviors, motives, and cognitive frameworks. Peterson and Gonzalez (2005) argue that entrepreneurial behavior is critical for people who want to start their own business and for employees who want to maintain their jobs. Baum, Frese, Baron, & Katz (2007) find that entrepreneurs’ personal characteristics are the most important factors for business success even more important than the business idea or industry setting. Rauch and Frese (2007) indicate that personality characteristics are enduring dispositions that show a high degree of stability over time. The authors conducted a thorough review of the literature related to personality traits and entrepreneurship before identifying the characteristics that are critical for entrepreneurs to possess in that they have an effect on business creation and success. On the other hand, Frese, Baron, and Katz (2007) report that despite the belief that entrepreneurs’ personal characteristics are important for new venture success, the psychology of the entrepreneur has not been thoroughly studied. Drucker (2004) sees entrepreneurs as individuals who act creatively, innovate and reconstruct. He values them as individuals who see and use profit-making opportunities by bringing together the factors of production. According to Drucker, there are seven sources for innovative opportunity: the unexpected - the unexpected success, the unexpected failure, the unexpected outside event; the incongruity -between reality as it actually is and the reality as it is assumed to be or as it ‘ought to be; innovation based on process need; changes in industry structure or market structure that catch

everyone unaware; demographics; changes in perception, mood, and meaning and; new knowledge, both scientific and non-scientific. Knowledge has as a major factor influencing economic growth which takes place predominantly through entrepreneurial capital or the capacity to engage in the entrepreneurial activities as highlighted by the new growth theory with its emphasis on knowledge (Romer, 1990, 1994). Although growth theories are not directly concerned with entrepreneurship and small firms, many authors have identified these as the key mechanisms through which knowledge spill-over contributes to job creation and the overall growth of the economy (Wennekers and Thurik, Nooteb Audretsch and Thurik, 2001; Pagano and Schivardi, 2003; Schuh and Triest, 2000). Relevant literature mainly describes factors thought to influence small business growth in two categories. The first comprises entrepreneurs’ characteristics such as behaviour, personality, attitude (Storey, 1994), their capabilities, including education and training that create higher expectations in some industry sectors (Henry et al., 2005), and their social capital which influences access to resources (Brush et al., 2004). Other entrepreneurial factors identified by Storey (1994) are previous management experience, family history, functional skills, and relevant business sector knowledge. None of these however have conclusively shown to constitute a universal success factor. 2.5 Motivations to become an Entrepreneur Several authors have argued that the decision to become an entrepreneur is a complex and multi-faceted phenomenon (Marlow and Strange, 1994; Shane et al., 1991; Stevenson, 1990). Among the motivating factors is the desire for independence and autonomy (Harrison and Hart, 1993; McDowell, 1995; Shane et al., 1991; Vivarelli, 1991). Therefore, independence appears to be a universal motivator for both women and men in deciding to become entrepreneurs (Kirkwood, 2007). Earlier studies on gender differences are inconsistent. Kirkwood (2007) found out that motivations that emerged from experiences at work were also an important consideration to many entrepreneurs. Two distinct categories of work-related motivation were found in the literature; those regarding a particular job or employer and broader career or employment level factors. . On a higher level than an individual job are career and employment issues such as career

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flexibility, advancement and co-career issues (DeMartino and Barbato, 2003), difficulty finding employment (Fox, 1998; Hakim, 1989) and redundancy (Marlow, 1997). DeMartino and Barbato (2003) found women were more motivated than men by co-career issues and career flexibility. The opposite trend existed for advancement where significantly more men were motivated by this factor than women (DeMartino and Barbato, 2003). Early studies have shown that a number of factors hamper the growth of small businesses, including lack of capital or financial resources, however, the degree to which limited financial resources alone are a major obstacle to business development is still controversial (Okpara, 2011). Kallon (1990) found that the capital needed to initiate a business is significantly negative when related to the rate of growth for the business. He also found that access to commercial credit did not contribute to entrepreneurial success in any significant way, and if it did, the relationship would be negative. This explains why entrepreneurial preparedness is key to business success and growth. Management such as accounting, finance, personnel, and management issues, have been cited as a major cause of business failure for small businesses in the literature. Tushabomwe-Kazooba (2006) found out that that poor recordkeeping and a lack of basic business management skills are major contributors to small business failure in Africa. 2.6 Team formation Researchers now recognize the importance of teams in the creation of new firms, after decades of emphasis on entrepreneurs as individuals (Forbes et al., 2006). This perhaps explains why the youth and women fund target groups for funding. Ventures founded by entrepreneurial teams tend to be more innovative than those with only one founder (Ruef, 2002) and larger teams are associated with higher levels of venture growth (Lee and Tsang, 2001). Representative studies show that truly solo entrepreneurs are not predominant. Martinez and Aldrich (2011) argue that strategic theories stress that entrepreneurs should balance instrumental and expressive goals in the selection of teams. On the rationalinstrumental side, theorists urge entrepreneurs to consider the complexity of entrepreneurial endeavors and include a variety of work experiences and complementary skills. For instance high technology firms tend to be founded by teams who recruit members they have met in previous jobs and

who have experience in diverse functional areas (Feeser and Willard, 1990; Harrison et al., 2004a). 3.0 Data and Methods 3.1 Introduction This chapter provides a discussion of the research methodology adopted by the study. It provides a discussion on the research design paying attention to the choice of the design, the population of study, sample and sampling techniques, ethical consideration, data collection methods as well as data analysis and data presentation methods used in the study. 3.2 Research Design This study adopted descriptive survey Research Design. According to Saunders, Lewis and Thornhill (2003) survey strategy is a deductive approach popular in business research. The main advantage of this research design is the ability to collect large amounts of data from sizeable population in a highly economical way. 3.3 Population and Sampling Design 3.3.1 Population Population is defined as a full set of cases from which a sample is taken, (Saunders, Lewis and Thornhill, 2003). The study population consisted of entrepreneurs who have benefited from the Kenya Youth Enterprise Development Fund and Women Enterprise Fund. Due to the large numbers of beneficiaries it was impractical to survey the whole population, as a result, a sample was scientifically selected to represent the population 3.3.2 Sampling Technique Saunders, Lewis and Thornhill (2003) state that probability sampling is commonly associated with survey based research due to the need to make inferences from the selected sample to answer the research questions. Fox and Bayat (2007) add that a probability sample is one in which each element in the population has a known and non-zero chance of being included. The study adopted two – stage sampling. The first step involved stratification of entrepreneurs in terms of type of funding: Kenya Youth Enterprise Development Fund and Women Enterprise Fund. Secondly, a random sample of 240 entrepreneurs was selected in proportionate to the size of each stratum.

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3.4 Data Collection Methods This study utilized primary data collection method by use of questionnaires carefully designed by Tristart to assess business readiness of the sample randomly selected. Prior to data collection, ethical approval was sought from National Council of Science and Technology (NCST). Pre-testing of the instruments was also carried out in selected entrepreneurs based on gender and type of funding. Those sample pretesting were excluded from the study. 3.5 Data entry, management and analysis A blinded double data entry was carried to assess the quality of data entered. The double data entry was run concurrently with the initial entry so that it can feed back areas that require keen attention. Data entry screen was designed with tables created and stored. The data entry screen was developed by the data clerk so that the necessary checks and balances (constraints) are put in place. This assisted in improving the quality of data by not allowing un-expected values and take care of any skips within the tools.

Data management and analysis was done using SPSS. Data management involved checking for consistency, coding, labeling and documentation. During data management, overall data quality was assessed. Data was disaggregated based on type of funding; gender and analyzed appropriately.

4.0 Discussion of study findings
4.1 Demographics The study targeted 240 entrepreneurs drawn from both Youth and Women fund in equal proportions however only 110 youth entrepreneurs and 75 women entrepreneurs responded translating to a response rate of 91.7% and 62.5% response rate for women and youth entrepreneurs respectively ( figure 1)

Figure 1: Response rate

The results on table1 indicate that majority of the respondents (24.4%) were from Starehe Constituency and the least were from Makadara (3.7%) (table 1).

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Table 1: Constituencies respondents sampled from Constituency Dagoretti Embakasi Kamukunji Kasarani Langata Makadara Starehe Westlands No response Total 4.2 Business sector Frequency 17 32 24 10 12 7 45 17 21 185 Percentage 9.2 17.3 12.9 5.4 6.5 3.7 24.4 9.2 11.4 100

4.2.1 Business Idea On whether they entrepreneurs needed money or advice, most enterpreneurs (86%) indicated that they neeed both advice and money, 10% indicated they need money and 3% needed advice (figure 2). Figure 2: Advice to entrepreneurs

On whether the entrepreneur for himself or someone else, the study findings indicate that most entrepreneurs (78%) are either running their own business or in partnership whereas 7% were working for someone else (figure 3). Figure 3: Are you working for yourself or someone else

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Business start up The study findings show that 38% of the entrepreneurs had already started their businesses, 34.6% will be ready in 1 to 3 months and 15.1% of the entrepreneurs will be ready in more than three months (table 2). Table 2: Responses on start up Response on start up Already started Within one month 1 to 3 months More than three months Not sure yet No response Business Plans 37% of the entrepreneurs surveyed had developed business plans whereas 59% had not. This indicates that majority of the entrepreneurs do not develop business plans and thus starting a business without one (figure 4). Figure 4: Business Plans Frequency 71 4 64 28 13 5 Percentage 38.4 2.2 34.6 15.1 7.0 2.7

Use of Business Plans in Seeking Funds 30% of the entrepreneurs indicated that they had submitted the business plans they developed to investors, bank and support agency, and 27% did not whereas 43% did not respond to the question (figure 5). Figure 5: Use of Business Plans in Seeking Funds

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Business Launch 62% of the entrepreneurs indicated that they had launched their businesses whereas 37% had not. Figure 6: Business Launch

Success of Business Launched 46.4% of the respondents indicated that the business launched had performed okay, 9.2% exceeded expectations and 37.9% did not respond to the question (table 3). Table 3: Success of Business Launch

4.2.2

Market sector

Growth Prospects About 41% of the entrepreneurs surveyed indicated that there was moderate growth in the market sector they operate in, 28.1% had experience rapid growth, 23.8% indicated that the market sector had experienced steady market growth and the remaining 5.4% had experience declining market growth. Table 4: Growth prospects Market Sector What are the growth prospects for your market Declining Steady Moderate growth Rapid growth No response 10 44 75 52 4 5.4 23.8 40.5 28.1 2.2 Frequency Percentage

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Level of competition Regarding the level of competition 48.6% of the respondents rated that the level of competition in the market sector they operate in as high, 25.9% as moderate, 13.5% as insignificant and 11.4% do not find any competition. Table 5: Level of competition in the market sector How do you rate the level of competition? None Some but insignificant Moderate High No response Frequency 21 25 48 90 1 Percentage 11.4 13.5 25.9 48.6 .5

Market existence On market existence 47.6% of the entrepreneurs surveyed indicated that the market they operate in has been in existence for 1 to 5 years and 26.5% indicated 6 to 15 years (figure 7). Figure 7: Market Existence

Other factors on market sector On other market factors, 55.7% of the entrepreneurs surveyed indicated that at least one well known nationally advertised brand that sells a product or similar to theirs exists whereas 43.2% were not aware (table 4). Further 63.8% of the entrepreneurs surveyed indicated knowledge of a clear leader in the market sector they operate in whereas 33.5% did not. On comparison between the price of the product and competition, about two thirds of the entrepreneurs considered it as average and less than one thirds lower than average. Majority (62.2%) of the entrepreneurs surveyed operate in a local market (table 6). On start up cost, 31.4% started with KShs. 101,000-250,000 and about 30% had started their businesses with less than Kshs.50, 000. Further 27% of the entrepreneurs had started with 26 to 100 employees, 19.5% started with 11- 25 employees and 17.8% with 1 to 10 employees.

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Table 6: Other Factors on market sector Is there at least a one well known, nationally advertised brand that sells a product or service similar to yours? Yes No No response Is there a clear leader in your market sector Yes No No response How does the price of your product or service compare to the competition Higher than average Average Lower than average No response The market your business operates in is: Local Regional National International No response What was the start up cost Less than 50,000 50,000-100,000 101,000-250,000 251,000-500,000 More than 500,000 No response What was the number of employees at start up None 1-10 11-25 26-100 Over 100 No response What is the anticipated number of employees at start up None 1-10 11-25 26-100 Over 100 No response

Frequency 103 80 2 Frequency 118 62 5 Frequency 17 124 31 13 Frequency 115 22 7 6 35 Frequency 55 18 58 14 6 34 Frequency 15 33 36 50 2 49 Frequency 6 15 22 22 2 118

Percentage 55.7 43.2 1.1 Percentage 63.8 33.5 2.7 Percentage 9.2 67.0 16.8 7.0 Percentage 62.2 11.9 3.8 3.2 18.9 Percentage 29.7 9.7 31.4 7.6 3.2 18.4 Percentage 8.1 17.8 19.5 27.0 1.1 26.5 Percentage 3.2 8.1 11.9 11.9 1.1 63.7

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Business Expectations On business expectations, 38.9% of the entrepreneurs indicated that their businesses will grow steadily over the years, 21.6% their businesses will become of regional importance, 18.4% indicated that they will become of national or international importance and 4.3% just provide them with a living (figure 8). Figure 8: Business Expectations

4.3 BUSINESS KNOWLEDGE Under business knowledge the TriStart tool includes knowledge and business plan of the entrepreneurship. 4.3.1 Knowledge and Business plan Knowledge on business functions In a scale of 1 (not at all knowledgeable) to 5(deeply knowledgeable), the entrepreneurs rated their level of knowledge in business strategy, marketing, sales, accounting, finance, research, manufacturing, administration and personnel functions of a business. On business strategy, 21.6% of the entrepreneurs indicated that they were deeply knowledgeable and on the other hand 18.9 % of the entrepreneurs were not at all knowledgeable. 31.4% of the entrepreneurs were deeply knowledgeable on marketing, 27.6 % knowledge and 21.6% quite knowledgeable. On sales 31.4% were deeply knowledgeable. On accounting, responses on quite knowledgeable and deeply knowledgeable intertwined at 23.2%. 28.6% of the entrepreneurs indicated that they were knowledgeable on research. Table 7: Responses on Knowledge and business plan

Knowledgeable

Not at all knowledgeable

knowledgeable

Deeply knowledgeable

Business Strategy Marketing sales Accounting Finance Research Manufacturing Administration Personnel

18.9(35) 6.5(12) 8.1(15) 18.4(34) 20.5(38) 13.5(25) 37.8(70) 14.6(27) 18.4(34)

11.9(22) 9.2(17) 7(13) 13(24) 16.2(30) 8.6(16) 5.9(11) 7.0(13) 8.1(15)

28.6 (53) 27.6(51) 27.6(51) 23.2(43) 22.7(42) 28.6(53) 9.7(18) 20.5(38) 16.8(31)

11.4(21) 21.6(40) 20(37) 23.2(43) 16.8(31) 21.1(39) 2.7(5) 20.5(38) 19.5(36)

21.6(40) 31.4(58) 31.4(58) 18.9(35) 17.8(33) 22.2(41) 13.5(25) 33(61) 32.4(60)

7.6(14) 3.8(7) 5.9(11) 3.2(6) 5.9(11) 5.9(11) 30.3(56) 4.3(8) 4.9(9)

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No response

Quite knowledge

Somehow

On contents of the business plan In a binary response 71.9% of the entrepreneurs indicated that their business plan included an executive summary, 70.3% mission/vision statement, 72.4% ownership statement, 74.1% market analysis, 75.7% market analysis, 77.8% customer buying pattern, 80% sales and promotion strategy, 80.5% sales forecast, 77.8% customer care plan, 78.9% personnel analysis plan, 74.1% profit and loss statement, 75.1% cash flow protection among others (table 8). Table 8: Contents of the Business Plan Business plan includes: Executive summary: Mission or vision statement Ownership statement market analysis Competition analysis customer buying pattern sales and promotion strategy sales forecast: customer care plan personnel analysis plan profit and loss statement: cash flow protection balance sheet Importance assumptions statement * Percentages are outside the brackets 4.4 Experience Yes 24.9(46) 27.0(50) 24.9(46) 23.2(43) 21.6(40) 19.5(360 17.3(32) 16.2(30) 18.9(35) 18.4(34) 23.2(43) 21.6(40) 21.1(39) 10.3(19) No 71.9(133) 70.3(130) 72.4(134) 74.1(137) 75.7(140) 77.8(1440 80(148) 80.5(149) 77.8(144) 78.9(146) 74.1(137) 75.1(139) 75.7(140) 87(161) No response 3.2(6) 2.7(5) 2.7(5) 2.7(5) 2.7(5) 2.7(5) 2.7(5) 3.2(6) 3.2(6) 2.7(5) 2.7(5) 6(3.2) 6(3.2) 2.7(5)

4.4.1 Work experience Number of years of work experience 37.8% of the respondents had work experience of 6 to 15 years, 33% 2 to 5 years of work experience, 19.5% 16 to 25 years and a small portion (2.2%) had more than 25 years. This indication that work experience is a motivation to many entrepreneurs (figure 9). Figure 9: Work Experience

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Responsibility held About average of the entrepreneurs had held the responsibility of owner/manager and 30.3% had held responsibility of a team leader (figure 10). Figure 10: Highest level of responsibility held

Other factors on work experience 48% of the entrepreneurs indicated that the core group of people he /she works with includes those he/she had worked with in the past. Figure 11: Are the people you work with previous colleagues

On relevance of work experience to business venture, 41.6% of the entrepreneurs indicated the it was directly relevant, 16.2% relevant and 9.7% quite relevant but with new skills required (table 9)

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Table 9: Relevance work experience to business venture Relevance of work experience Frequency Directly relevant 77 Relevant 30 Quite relevant, but with new skills required 18 A totally new type of business 25 No response 35 Percentage 41.6 16.2 9.7 13.5 18.9

4.4.2

Business Experience

In a binary response, 45.4% of the entrepreneurs have worked in a wide range of industries, 63.2% have worked in a wide range of functions, 56.8% have experience as a director of business, 62.2% have a special technical expertise, 81.1% have experience of building a business team and 77.3% have previously raised funding for a business. Interestingly, 68.1% have not previously raised funding for a business. Table 10: Business Experience Business Experience I have worked in a wide range of industries I have worked in a wide range of functions I have experience as a director of business I have a special technical expertise I have experience of building a business team I have previously raised funding for a business I have previously raised funding for a business Yes 45.4(84) 63.2(117) 56.8(105) 62.2(115) 81.1(150) 77.3(143) 30.3(56) No 53(98) 34.6(64) 41.1(76) 36.2(67) 14.6(27) 21.1(39) 68.1(126) No response 1.6(3) 2.2(4) 2.2(4) 1.6(3) 4.3(8) 1.6(3) 1.6(3)

4.5

Market position

Marketing position involves sources of support, competitive advantage, and product 4.5.1 Sources of Support On sources of support 79.5% indicated team members as very important, 35.7% of the entrepreneurs indicated partner and children as important, 71.9% cited suppliers as very important, 87% customers as very important and 60% cited professional services as very important (table 11). Table 11: Sources of Support Sources of Support Team members Partner and Children wider family Friends Suppliers Customers Government support agencies Professional services Very Important 79.5(147) 44.3 (820 23.8(44) 35.7(66) 71.9(133) 87(167) 60.5(112) 60(111) Important 14.6(27) 35.7(66) 34.1(63) 42.2(78) 17.8(33) 7.6(14) 29.7(55) 27(50) Not relevant 3.8(7) 14.1(26) 37.8(70) 16.2(30) 6.5(12) 2.2(4) 6.5(12) 9.7(18) No response 2.2(4) 5.9(11) 4.3(8) 6(11) 3.8(7) 3.2(6) 3.2(6) 3.2(6)

4.5.2 Competitive advantage On a binary response 47 % of the entrepreneurs indicated that their business offer products/services to a brand new group of customers. 53.5% indicated that they had not modified their products/services to give greater customer appeal and 54.6% do not apply new methods or technology to provide products/services at lower cost (table 12).

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Table 12: Competitive Advantage The business will/does Offer products/services to a brand a new group of customers Have technology that is new Modify existing products/services to give greater customer appeal Yes 47(87) 37.3(69) 45.4(84) No 49(90) 58.9 (109) 53.5(99) 54.6(101) Response 4 (8) 3.8(7) 1.1(2) 1.1(2)

Apply new methods or technology to provide products/ services at lower cost 44.3(82)

4.5.3 Product Further on a binary response, 76.8% of the entrepreneurs indicated that the products and services they offer were customer friendly. 53.5% on the hand indicated that their products and services were not offered in a competitive way and 63.8% were not offered in a quick way. Table 13: Product

The business will/does offer products and services in a more
Customer friendly way Competitive way Quick way Flexible

Yes
76.8(142) 44.9(83) 35.1(65) 51.4(95)

No
22.2(41) 53.5(99) 63.8(118) 47(87)

Response
1.1(2) 1.6(3) 1.1(2) 3(1.6)

4.6 Style 4.6.1 Communication 90.8% of the entrepreneurs surveyed indicated that they prefer when success brought about their effort is attributed to everyone in the team. 54.1% of them indicated that for effective team performance formal communication must be enhanced.53.5% of the entrepreneurs described their communication style as predominantly formal. 41.6% of the entrepreneurs indicated that they communicate frequently when there is failure around. 62.7% of the entrepreneurs indicated that they believed that the most effective team will have detailed systems and procedures. Further 58.4% of the entrepreneurs indicated that they naturally communicate what needs to be done by assigning clear responsibilities and tasks (table 14).

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Table 14: Communication Do you prefer it when success brought about by your effort is? Attributed to everyone in the team Attributed primarily to yourself Both of the above No response Which do you think is more important for effective team performance Formal communication Informal communication Both formal and informal communication No response How do you describe your communication style? Predominantly formal Predominantly Informal No response When do you communicate more frequently? When the team is performing well When there is failure all around Both of the above No response I believe that the most effective team will have Detailed systems and procedures Freedom to act as needed Both of the above No response Do you naturally communicate what needs to be done by Using a broad picture of what should be done Assigning clear responsibilities and tasks Both of the above No response 4.6.2 Team preferences On team preferences 65.4% of the entrepreneurs surveyed indicated that they would like to be part of the team that encourages their individuals to do their own things. Whereas 56.8% would like to be part of as a team in which individual contributions are encouraged and appreciated. 83.2% believed that business needs teams that behave in predictive ways. Further 73% of the entrepreneurs indicated that it is important that the team members understand and agree on a vision for the company (table 15). Frequency 168 12 1 4 Frequency 100 64 18 3 Frequency 99 78 3 Frequency 72 77 29 7 Frequency 116 60 2 6 Frequency 68 108 3 6 Percentage 90.8 6.5 0.5 2.2 Percentage 54.1 34.6 9.7 1.6 Percentage 53.5 42.2 1.6 Percentage 38.9 41.6 15.7 3.8 Percentage 62.7 32.4 1.1 3.2 Percentage 36.8 58.4 1.6 3.2

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Table 15: Team Preferences I would like to be part of a team: Frequency That encourages their individuals to do their own things 121 Where the individuals are not encouraged to do too many things on their own 51 Both 1 No response 6 In which individual contributions are encouraged and appreciated 105 Where team working is considered more important than individual contributions 71 Both 3 No response 6 I believe that business needs teams that Behave in predictable ways 154 Don’t necessarily behave in predictable ways 24 No response 7 For me it is important that the team members Understand and agree on a vision for the company 135 Are given clear, systematic roles and procedures 39 Both 3 No response 8 Percentage 65.4 30.8 .5 3.2 56.8 38.4 1.6 3.2 83.2 13.0 3.8 73.0 21.1 1.6 4.3

4.6.3 Attitude In a scale of 1 (does not apply to me) to 5(applies to me) the entrepreneurs indicated that looking at the nuts and bolts of the organization applies to them. 73.5% of the entrepreneurs indicated that looking out for new opportunities and 63.8% of the entrepreneurs generating 50.3% indicated that, “I hate uncertainty”, applies to them. Table 16: Attitude How strongly do you agree with the following statements I Look after the nuts and bolts of the organisation I will risk bankruptcy if the potential rewards are big enough I am on the lookout for new opportunities I generate new ideas leading to changes I hate uncertainty Does not apply 2 to me (1) 16.8(31) 15.7(29) 0.5(1) 14.6(27) 5.4(10) 8.1(15) 1.6(3) 3.2(6) 5.4(10) 3 7(13) 18.4(34) 9.2(17) 8.1(15) 16.2(30) 4 13(24) 5(applies to me) 53.5(99) No response 4.3(8) 1.6(3) 2.2(4) 3.2(6) 2.7(5)

17.3(32) 38.9(72) 13(24) 73.5(136)

21.6(40) 63.8(118) 10.8(20) 50.3(93)

4.7 TriStart Individualized Reports By completing the TriStart evaluation the entrepreneurs were assessed against the TriStart entire database of global start-up and early stage businesses on which the TriStart research programme is based. The entrepreneur’s TriStart evaluation score reflects his/her current likelihood of being successful in his/her business venture. The evaluation identifies three core component categories within which the 19 critical factors sit. These are knowledge and skills; market and technology and entrepreneurial spirit. Overall the women fund beneficiaries scored better on business readiness as compared to youth fund beneficiaries. 47.3% of the youth fund and 36% of the women beneficiaries surveyed scored 51-75%.

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Table 17: Cross tabulation on type of funding received and Overall Tristart Evaluation results Type of funding received Youth fund women fund Total Overall results 0 -25 26-50 1.8 (2) 2.7 (2) 2.2 (4) 48.2 (53) 61.3 (46) 53.5 (99) Total 110 75 185

51 -75 47.3 (52) 36 (27) 42.7 (79)

76 -100 2.7 (3) 0 1.6 (3)

4.7.1 Knowledge and Skills Among the core components of TriStart tool is knowledge and skills. Overall 63% of the entrepreneurs both from women and youth fund scored 26-50% on knowledge and skills and 36% scored 51-75% (figure 12). Figure 12: Knowledge and Skills

Some 61% of the youth beneficiaries scored 26 -50% whereas 68% of the women fund beneficiaries scored the same. 39.1% of the youth fund beneficiaries scored 51-75% whereas 32% of the women fund scored the same (table 18). Table 18: Cross tabulation on type of funding received and; Knowledge and skills Knowledge and Skills Type of funding Youth fund Women fund received 0 -25 0.0% 1.3% (1) 0.5% (1) 26-50 60.9% (67) 66.7%(50) 63.2% (117) 51-75 39.1%(43) 32.0%(24) 36.2%(67) Total 100.0%(110) 100.0%(75) 100.0%(185) Chi-Square P-value 0.314

Total
4.7.2 Market and Technology

A majority of the entrepreneurs (98%) scored 0 -25% on market and technology. An indication that entrepreneurs are not well prepared in market and technology.

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Figure 13: Market and Technology

The cross tabulations results indicate that 97% of the youth fund beneficiaries scored 0-25% on market and technology and 98% women fund beneficiaries scored the same (figure 16). Figure 14: Cross tabulations on type of funding received and, Market and technology Market and technology 0 -25 26-50 97.3%(107) 2.7%(3) 98.7% (74) 1.3%(1) 97.8%(181) 2.2%(4) Chi-Square P-value 0.522

Type of received Total

funding Youth fund Women fund

Total 100.0%(100) 100.0%(75) 100.0%(185)

4.7.3 Entrepreneurial Spirit On entrepreneurial spirit 98% of the entrepreneurs scored 26-50%. Interestingly only 1% of the entrepreneurs scored 51-75% (figure 15). Figure 15: Entrepreneurial Spirit

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Cross tabulations on type of funding received and entrepreneurial spirit results indicate that 97.3% of the youth fund beneficiaries scored 26-50% whereas 100% of the women fund beneficiaries scored the same. Among the women fund none of the beneficiaries scored 51- 75%. Table 19: Cross tabulation on type of funding received and entrepreneurial spirit Entrepreneurial spirit Type of funding Youth fund Women fund received Total 0 -25 0.9% (1) 0.0% 0.5%(1) 26-50 97.3%(107) 100.0% (75) 98.4%(182) 51-75 1.8%(2) 0.0% 1.1%(2) Total 100.0%(110) 100.0%(75) 100.0%(185) Chi-Square P value 2.079

4.8 TriStart Factors The TriStart evaluation grades the entrepreneurs’ strengths against each of the 19 factors critical to business success. Each factor is graded as high, medium or low.

4.8.1 Market and Technology 39.5% of the entrepreneurs were rated lowly on technology, 36.8% rated medium and 23.8% rated highly.47.6% of the entrepreneurs were rated lowly on market status, 44.9% rated as medium and 7.6% as high. About two thirds (62.2%) of the entrepreneurs were rated as medium on customer orientation (table 20) Table 20: Rating on Market and Technology Rating Type of funding Technology orientation Market status Market Prospects Customer Orientation Low Women 44 (33) 52.0(39) 9.3(7) 5.3(4) Youth 36.4(40) 44.5(49) 7.3 (8) 16.4(18) Medium Women 36(27) 41.3(31) 17.3(13) 77.3(58) Youth 37.3(41) 47.3(52) 31.8 (35) 51.8(57) High Women 20 (15) 6.7 (5) 73.3(55) 17.3(13) Youth 26.4(29) 8.2 (9) 60.9(67) 31.8(35) Chi-square P value 0.487 0.604 0.087 0.002

4.8.2 Experience and Skills On experience and skills, 46.4% of the youth entrepreneurs rated breath of experience as high and 34.7% of the women entrepreneurs rated it as low. Business experience was rated medium on average by both youth and women entrepreneurs. Business planning expertise on the other hand was rated lowly by both the youth and women entrepreneurs. Interestingly level of responsibility was rated highly by both youth and women entrepreneurs (table 21). Table 21: Rating on Experience and Skills Rating Low Type of Funding Women Youth Breadth of Experience 34.7(26) 27.3(30) Business Experience 10.7(8) 13.6(15) Business planning 58.7(44) 54.5(60) expertise Business Area 48.0(36) 40.9(45) Expertise Level of responsibility 10.7(8) 8.2(9) Finance and 26.7(20) 24.5(27) Accounting Administration 22.7(17) 19.1(21) Sales and Marketing 14.7(11) 9.1(10)

Medium Women 32.0(24) 57.3(43) 16.0(12) 36.0(27) 30.7(23) 42.7(32) 29.3(22) 41.3(31)

Youth 26.4(29) 59.1(65) 19.1(21) 42.7(47) 42.7(47) 41.8(46) 30.9(34) 44.5(49)

High Women 33.3(25) 32.0(24) 25.3(19) 16.0(12) 58.7(44) 30.7(23) 46.7(35) 44(33)

Youth 46.4(51) 27.3(30) 26.4(29) 16.4 (18) 49.1(54) 33.6(37) 50(55) 46.4(51)

Chi Square P- value 0.208 0.711 0.822 0.600 0.248 0.901 0.597 0.501

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4.8.3 Entrepreneurial Spirit Entrepreneurial spirit was assessed on strategic focus, appetite for risk, dynamism, vision communication, informal communication, team independence and team player. 50.7% of the women fund entrepreneurs and 53.6% of the youth fund entrepreneurs rated (50.7%) rated strategic focus as low. On the other hand 43.6% of the youth and 37.3% of the women fund entrepreneurs rated appetite for risk as high. The results further indicate that dynamism was rated highly by both entrepreneurs. Vision communication was rated as medium. Interestingly team independence was rated by majority from both youth and women entrepreneurs as low (table 22). Table 22: Entrepreneurial Spirit Rating Type of Funding Strategic focus Appetite for risk Dynamism Vision Communication Informal Communication Team Independence Team Player Low Women 50.7(38) 25.3(19) 21.3(16) 44(33) 90.7(68) 1.3(1) Youth 53.6(59) 22.7(25) 14.5(16) 49.1(54) 90.9(100) 6.4(7) Medium Women 44(33) 37.3(28) 12.0(9) 50.7(38) 28.1(21) 8.0(6) 56(42) Youth 41.8(46) 33.6(37) 16(14.5) 55.5(61) 18.2(20) 9.1(10) 59.1(65) High Women 5.3(4) 37.3(28) 88(66) 28(21) 28.0(21) 1.3(1) 42.7(32) Youth 4.5(5) 43.6(48) 85.5(94) 30(33) 32.7(36) 0.0 34.5(38) Chi Square P- value 0.913 0.693 0.619 0.487 0.285 0.466 0.177

5.0 Discussion, Conclusion and Recommendations The study sought to assess the business readiness of the youth and women beneficiaries. The study was guided by the following questions. i. What is the level of business readiness among the youth and women entrepreneurs in Nairobi, Kenya? ii. What are the factors that contribute to the business readiness among the youth and women entrepreneurs in Nairobi, Kenya? iii. Do individual capabilities of entrepreneurs such as training, education, and prior experience in the same field have a significant effect on the growth of the business through the management strategies and business practices they choose to adopt? The study adopted a cross sectional descriptive design. The study population consisted of entrepreneurs who have benefited from the Kenya Youth Enterprise Development Fund and Women Enterprise Fund. The study adopted two- stage sampling. The first step involved stratification of entrepreneurs in terms of type of funding: Youth fund and Women Fund. Secondly, a random sample of 240 entrepreneurs was selected in proportionate to the size of each stratum. Primary data collection method by use of questionnaires carefully designed by Tristart to assess business readiness of the sample randomly selected. Prior to data collection, ethical approval was sought from National

Council of Science and Technology (NCST). Data management and analysis was done using STATA/SPSS. Data management involved checking for consistency, coding, labeling and documenting. During management, overall data quality was assessed. Data was disaggregated based on type of funding; gender and analyzed appropriately. The analysis was categorized based on business sector, business knowledge, experience, market position and style. The study targeted 240 entrepreneurs drawn from both Youth and Women fund in equal proportions however only 110 youth entrepreneurs and 75 women entrepreneurs responded translating to a response rate of 91.7% and 62.5% response rate for women and youth. Majority of the entrepreneurs were from Starehe. 5.1 Business Idea Majority of the entrepreneurs (86%) indicated that they need both advice and money. On business start up about one third of the entrepreneurs indicated that they will be ready in 1 to 3 months to start their business. This indicates that this category of entrepreneurs after receiving funding did not start their business immediately. Further, majority of the entrepreneurs had not developed business plans and only 30% of the entrepreneurs indicated that they had submitted the business plans they developed to investors, bank and support agency.

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5.2 Market Sector This involved sources of support, competitive advantage and product. Majority of the entrepreneurs indicated that team members are very important as sources of support. About average of the entrepreneurs had not modified their products/services to give greater customer appeal. Majority of the entrepreneurs indicated that the products and services they offer were customer friendly. 5.3 Style This involved communication, team preferences and attitude of entrepreneurs. Majority of the entrepreneurs surveyed indicated that they prefer when success brought about their effort is attributed to everyone in the team. Average of the entrepreneurs described their communication style as predominantly formal and they naturally communicate what needs to be done by assigning clear responsibilities and tasks. On team preferences about two thirds of the entrepreneurs surveyed indicated that they would like to be part of the team that encourages their individuals to do their own things. 5.4 Results on Individualized Reports Overall the women fund beneficiaries scored better on business readiness as compared to youth fund beneficiaries. On knowledge and skills 61% of the youth beneficiaries scored 26 -50% whereas 68% of the women fund beneficiaries scored the same. 39.1% of the youth fund beneficiaries scored 51-75% whereas 32% of the women fund scored the same. On experience and skills, 46.4% of the youth entrepreneurs rated breath of experience as high and 34.7% of the women entrepreneurs rated it as low. Business experience was rated medium on average by both youth and women entrepreneurs. Business planning expertise on the other hand was rated lowly by both the youth and women entrepreneurs. Interestingly level of responsibility was rated highly by both youth and women entrepreneurs.

Entrepreneurial spirit was assessed on strategic focus, appetite for risk, dynamism, vision communication, informal communication, team independence and team player. 50.7% of the women fund entrepreneurs and 53.6% of the youth fund entrepreneurs rated (50.7%) rated strategic focus as low. On the other hand 43.6% of the youth and 37.3% of the women fund entrepreneurs rated appetite for risk as high. The results further indicate that dynamism was rated highly by both entrepreneurs. Vision communication was rated as medium. Interestingly team independence was rated by majority from both youth and women entrepreneurs as low. 5.5 Conclusion and Recommendations Overall the results indicate that entrepreneurial readiness is still low among the entrepreneurs who benefited from both youth and women fund. This is therefore crucial for enterprise funders needs to assess the entrepreneurs on business readiness to identify the business readiness gaps. 5.6 Limitations and future research This is a descriptive study to determine business readiness of the Kenya Youth Enterprise Development Fund and Women Enterprise Fund beneficiaries, so the findings do not necessarily apply to all entrepreneurs in Kenya. In addition, the sample is not a representation of the entire SME sector in Kenya; therefore, the results cannot be generalized to SMEs that were not part of this study. Future research should collect data on a longitudinal basis in order to help to draw causal inferences and validate the findings of this study.

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Centre for Enterprise Development, Kenya Institute of Management, Maple Court, 1st Floor, Westlands Close, off Westlands Road. P. O. Box 43706 – 00100 Nairobi. Call: +254 020 3749929, 2396411. E-mail: ced@kim.ac.ke www.kim.ac.ke

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